China’s mutual funds continued to cut their holdings in start-ups in the third quarter, consistent with ChiNext’s significant underperformance compared with large caps since 2016, Gao Ting, Head of China Strategy at UBS Securities wrote in a report.

With China’s generally upbeat third-quarter earnings in the rear-view mirror, investors are braced for a possible cooling in the economy as they weigh the impact of the government’s tough anti-corruption campaign and continuing deleveraging efforts.

The rapid rise in bond yields since mid-October “is the result of a sudden change in expectations toward the economy, and fresh assessment of the government’s determination to deleverage,” wrote Qiao Yongyuan, Shanghai-based strategist at CIB Research.

In the stock market, the impact of rising yields “is being gradually felt,” he said.

But a correction in China’s A-shares could be seen as a bargain-hunting opportunity for some overseas investors.